Abstract
When selling a home, through the choice of the list price, sellers make a trade-off between achieving a quick sale at a low price or waiting for higher bids. This list-price setting decision is governed by a discount rate. Using data on housing sales in the Netherlands, we derive gross discount rates under bilateral bargaining and bidding wars. The estimated discount rates are 25%–35%, which are considerably higher than long-run housing market discount rates and may result from the seller's unfamiliarity with the selling process. The rates are higher for sellers that already moved and have a low education.
| Original language | English |
|---|---|
| Pages (from-to) | 955-1002 |
| Journal | International Economic Review |
| Volume | 65 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2024 |
Bibliographical note
Publisher Copyright:© 2023 The Authors. International Economic Review published by Wiley Periodicals LLC on behalf of the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.